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Practical Improvement to Automatic Stay for Oregon and Washington Debtors

The Ninth Circuit has now held that a debtor who sues for damages with respect to a violation of the automatic stay may recover the reasonable fees it incurs prosecuting the action, even after the stay violation is cured.

The Section 362 of the Bankruptcy Code’s includes a fee recovery clause: “An individual injured by any willful violation of a stay provided by this section shall recmover actual damages, including costs and attorneys’ fees.” Up until now, the 9th Circuit, in contrast to every other court held that section 362(k) allowed a debtor to recover only those fees incurred to end the stay violation itself, not the fees incurred to prosecute an action for damages. Of course this rule was of little help in combatting stay violations because most attorney fees for stay violations are incurred after the stay violation has ended. Debtors who wished to hold creditors accountable were forced to foot the bill. Now, at long last, debtors who previously lacked any real financial incentive to pursue damages for stay violations may now be more willing to bring those actions.

Please contact our office immediately, if you feel that your protections under the automatic stay provision has been violated.